Beyond Bitcoin: How Blockchain Could Help the Recycling Industry

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By Adam Allington and Sylvia Carignan

The same technology that powers cryptocurrencies like bitcoin is slowly making inroads into waste management, and could even play a pivotal role in helping to keep recycling out of landfills.

Blockchain is a kind of super-secure digital ledger, where transactions are recorded chronologically and publicly. According to industry experts the technology could also make it much easier to track shipments of waste and recycling, and even help with regulatory compliance.

“The shipping of recovered materials is necessarily heavily regulated, and we’ve had a real impact in simplifying the process while remaining compliant,” said Jody Cleworth, CEO of Marine Transport International, a New Jersey based freight forwarder.

The company recently completed a successful blockchain pilot that created a common tracking system linking up recycling suppliers, port operators, and ocean carriers.

Potential for Less Regulation?

“Shipment data can now enter the network at the source of where it’s created, and we then automate the associated regulatory milestone,” Cleworth said. “The potential savings in time and money for less regulated commodities is huge.”

By making it easier for companies to track and verify where their waste shipments are going, some said that blockchain may actually supplant the need for certain regulations.

“Heavy-handed regulation, in some cases, was necessary because you had lots of mismanagement in particular areas,” said Mathy Stanislaus, a circular economy fellow at the nonprofit World Resources Institute.

Stanislaus, a former head of the Environmental Protection Agency’s Office of Land and Emergency Management, points to waste management regulations, both in the U.S. and abroad, meant to address issues like usable or hazardous materials that are sent to landfills, or the cross-border dumping of waste.

Chinese Ban and Recycling ‘Transparency’

Tracking waste took on new relevance this year after China effectively decided to stop accepting imports of recycling from the West. China’s move has led to a backlog at recycling centers, prompting some around the globe to simply dump the material in landfills.

“A big issue the waste industry faces is the lack of accountability for the end destination of recycled material,” said Phil Rodoni, chief technology officer at Rubicon, an Atlanta-based tech startup that provides cloud-based recycling and waste services.

Waste has traditionally proven difficult to track, Rodoni told Bloomberg Environment.

But with blockchain it wouldn’t be that difficult to design a system where individual pieces of plastic (or trash bags) could be tagged with scannable QR-Codes, and then tracked at each step of the recycling supply chain.

“If we have better data about what was picked up and where the material was delivered, that would also help companies better understand the economic value in their waste streams while also helping them execute on their sustainability goals,” Rodoni said.

And a system with greater accountability would help assure households that when they deposit recyclables on the curb every week, those bottles, cans, newspapers, and cardboard won’t end up in a landfill, Rodoni said.

“This, unfortunately, is an all too common occurrence when there is a lack of systems and technology in place to track the material,” he said.

Cryptopayments Big Selling Point

While it can provide an improved platform for tracking and regulatory compliance, blockchain, at its core, remains a system designed to encrypt and secure digital payments.

This function offers enormous benefit for recycling companies buying and selling products across borders, said Mike Jackson, managing director of Prismm Environmental, a U.K.-based waste management consultancy.

“When we are trading recyclable materials, we are buying in the U.K. and selling into global markets, so transaction fees and foreign exchange commission adds cost to the business,” said Jackson, whose company last December became the U.K.'s first to buy bales of recycled paper using bitcoin.

“We could save thousands of pounds if all of our payments and revenue was in bitcoin rather than traditional payments, such as U.K. sterling or U.S. dollar,” said Jackson.

One blockchain application target plastic pollution specifically.

A Vancouver-based startup called Plastic Bank has created a transaction-based app that pays waste collectors in bitcoin for plastic collected in their communities. The recycled material is then sold up the chain to large companies looking to increase their sustainability footprints.

Operating Costs a Question Mark

The global cost of dealing with solid waste, which was $205 billion a year in 2010, is expected to rise to $375 billion annually by 2025. The sharpest cost increases are forecast for developing countries, according to the World Bank.

Though companies and investors are looking to blockchain’s potential to cut transaction costs, questions about operation costs—specifically the enormous amount of energy needed to run some blockchain systems—are an issue, said Ben Elliott, a financial policy analyst for Bloomberg Intelligence

“It’s really innovative, but it can also be really expensive,” Elliott told Bloomberg Environment.

And as the number of blockchain-based records grows, the need for additional data storage on cloud applications and servers will increase.

Still, the cost of running blockchain operations for the recycling industry would be “minimal” compared to the costs of fines associated with mismanaging millions of tons of waste materials, said Rodoni.

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